Washington Mutual Tells How It'd Spend $75B on CRA After Buying Great

Washington Mutual Inc. has revised its $75 billion Community Reinvestment Act pledge to satisfy activists who threatened to protest its plan to acquire of Great Western Financial Corp.

The revisions, released Monday, do not increase the size of the 10-year pledge, which is the largest ever made. Rather, they add details to what was a general commitment.

For example, the new plan requires Washington Mutual to devote nearly $3 billion in small-business loans to minorities and to target $7 billion in multifamily housing loans to those earning less than half of their community's median income.

The banking company also promised to find new tenants for branches it plans to close and agreed to help nonprofit groups buy and redevelop foreclosed properties.

Finally, the Seattle-based holding company pledged to become the leader in lending to low- and moderate-income neighborhoods and minority census tracts in California.

The revisions were worked out last week between Washington Mutual chairman and chief executive officer Kerry K. Killinger and leaders of the Greenlining Institute and California Reinvestment Coalition.

"These are not big changes," said Lee D. Lannoye, Washington Mutual's executive vice president of corporate administration and credit. "The biggest change was the ability to sit down with them in person and discuss these areas."

Mr. Lannoye added that the thrift does not expect activists to file any protests to the proposed merger with Great Western.

Activists had threatened to support rival H.F. Ahmanson & Co.'s hostile takeover bid for Great Western unless Washington Mutual revised its CRA plan. H.F. Ahmanson has pledged $70 billion in CRA initiatives. Both companies promised to implement scaled-down versions of their plans if they lose the bidding war.

Robert Gnaizda, general counsel at the Greenlining Institute, said the two programs are now virtually identical, eliminating the need for activists to oppose either bid.

"The community wins no matter who gets the merger," Mr. Gnaizda said. "We get the largest commitment ever for CRA and the loser has a commitment as well."

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